WINDHOEK - The Namibia Students Financial Assistance Fund (NSFAF), in sharp irony, incurred losses of N$7.9 million from a debt recovery contract it had with Tribesmen to collect funds owed to it by former students.
NSFAF has since terminated the contract with Tribesmen for alleged breach of contract.
NSFAF acting CEO Kennedy Kandume yesterday announced the termination of the outsourcing of recovery contract, saying to date the fund has paid a total of N$14.7 million in fixed management fees to Tribesmen, compared to N$6.8 million recovered by this entity from former students. This leaves N$7.9 million in financial loses for NSFAF.
Since 2014, the fund has been paying Tribesmen an amount of N$287 500 as fixed management fee monthly.
“We terminated the contract on 14 September [last Friday]. The contract was entered into by the [suspended] CEO, Hilya Nghiwete. We realised the contract is a rip off.
We paid them N$14.7 million and what they brought is just N$6.7 million. We are talking to our legal advisor if we will take legal action or not,” Kandume reacted.
Profile Investment is the holding company of Tribesmen Investment, a company that is in a joint venture with South African company New Integrated Credit Solutions, to trace and collect millions owed by NSFAF beneficiaries in student loans.
The joint venture was awarded the five-year contract back in October 2014, and is to get 10 percent commission on whatever they recovered.
After NSFAF fully outsourced the recovery function to Tribesmen in 2015, the contract changed to give the company 12 percent commission on whatever they recovered.
Kandume explained that on 14 September, an absolute decision to terminate the recovery contract between NSFAF and Tribesmen/NICS joint venture was reached, following breach of Clause 15.4 of the service legal agreement and failure to remedy same.
Kandume noted that in accordance with Clause 10.2 of the agreement, a termination notice was subsequently served on Tribesmen.
He explained that Clause 15.4 specifically states that Tribesmen is not allowed to disclose the terms of the service legal agreement without NSFAF prior written consent.
However, he said on March 27 and 28 this year, Tribesmen published in the print media information of confidential nature.
He noted that in any event, the terminated agreement has never been in the best interest of NSFAF and by extension that of the public in the first place.
He said effective of 14 September, the recovery function has since returned in-house with a minimum saving of N$1.8 million annually. He also assured that no student file has been lost in the returning process.
He called on the public to have confidence in their redirected recovery strategy, while urging former beneficiaries to come forward and repay their loans for the sustainability of the fund.
Asked whether the NSFAF has capacity to recover student debts on its own, Kandume answered affirmatively.
He said NSFAF, prior to engaging Tribesmen, brought in money in a range of N$147 000 monthly.
“This means the people inside were doing much better than outsourcing. Capacity is there. We learned a lesson. I don’t think we want to go that route of outsourcing again. We are not looking at outsourcing soon. We want to make the fund a revolving fund,” Kandume said.
The contract with Tribesmen had two elements, one for setting up of a recovery system software development, and another for debt collection, which only started in earnest around 2016, leading to the recovery of N$5,4 million.